Friday, November 1, 2019

The Portfolio of Current Issues in Risk Management Essay

The Portfolio of Current Issues in Risk Management - Essay Example Companies however have also sought to establish various steps to manage these risks, including the review of the management of organization risks and the review of the present operating models. Commentary The article above discusses the issue which relates to the global supply chain risk. The normal process of supply and demand in the current context of the globalized economy materializes in the form of the globalized demand and supply process. This means that demand and supply is now governed by a larger market, one which encompasses many countries (Taylor and Brunt, 2001). In the past, the commercial enterprises were mostly based on national activities, with only few multinational corporations venturing into commercial activities outside their home countries. With the eventual spread of globalization however, economic practices soon became significant trends in doing business. This included the globalized supply chains (Taylor and Brunt, 2001). Risks in relation to these supply cha ins however also impacted significantly on various corporations and business processes. Inasmuch as the global supply chain was able to secure more diverse, cheaper, and more bountiful supplies; it has also been vulnerable to various issues within the supply chain (Rainer and Cegielski, 2010). The globalized nature of the supply chain has made the delivery of supplies subject to the events which are unfolding in the countries included in the supply chain (Rainer and Cegielski, 2010). In effect, the risks experienced by the main lines and countries involved in the supply line are felt by all the countries or corporations within the chain. As was mentioned in the article, the earthquake in Japan may have been an ocean away from the western countries, however, its impact was felt in the US, and as far away as the United Kingdom (Hoover, et.al., 2001). The global supply chain, in effect, is affected by the economic crisis felt by countries or regions involved in the supply chain. Raw ma terials are usually sourced from one part of the globe, processed by another country, and then manufactured in another. The finished product is then distributed in different parts of the world (Hoover, et.al., 2001). Issues in the mining of copper in the Philippines for example would affect supply for processing companies. These processing companies would have a higher processing cost and therefore demand higher costs for their sales. In turn, the manufacturing companies would also increase their price. Eventually, the end consumer bears the cost of the price increase. Political instability also increases the risk within the global supply chain. This is very much apparent in the case of conflicts in the Middle East and in North Africa where issues in the region are causing difficulties in the oil supply chain (Hoover, et.al., 2001). The Middle East controls significant oil reserves and where the supply from these countries are curtailed or affected by political conflicts, the price of oil is also affected. Once again, within the supply chain, the costs are increased. Oil is a major source of fuel and any increase in its price affects many industries and most human commercial activities (Hoover, et.al., 2001). In the end, the consumer again bears the brunt of the economic costs

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.